By Ingo Schmidt
Socialist Project Bullet
Meanwhile, rating agencies like Moody's and Standard and Poor's cast judgement on the viability of fiscal deficits and public sector cuts, as if their assessments of the financial sector had nothing to do with the ‘manias, panics, and crashes’ that pushed a cyclical recession near depression in the first place. Public deficits between 12% and 13% of GDP in Britain and the U.S. are bad, they say, but not so bad that the austerity measures they consider appropriate can't be left to Number 10 Downing Street and the White House.
In the European periphery, however, things are, according to the master evaluators of the world, quite different. Lumped together as PIGS, short for Portugal, Ireland Greece and Spain (or PIIGS, in adding Italy), these countries are charged with notorious wasteful spending and an inability to reign in deficits. Therefore, deficits in these countries, while not exceeding the British-American 12-13% range, are a threat to private investments in government bonds and loans.
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